New cooperation eyes Northern Sea Route development

On 26 February, Japanese MOL signed a Memorandum of Understanding with the Far East Investment and Export Agency (FEIA), under the Ministry of the Russian Federation for the Development of the Far East (MINVR), to cooperate in the development of the Northern Sea Route and the Russian Far East.

MOL has been participating in the Yamal LNG Project, world's first large scale energy project that exports cargoes through the Northern Sea Route, and its first ice-breaking LNG carrier for the project is to go into service at the end of March. MOL has also been proceeding with a feasibility study to establish an LNG transshipment terminal and marketing complex in the Kamchatka area with Novatek, the largest independent gas producer in Russia and the main shareholder of the Yamal LNG. Stepping further, the company sees abundant natural energy resources in the Arctic area.

With the reduction of ice in the Arctic and the design of new ice-breaking commercial vessels, the transportation of Arctic natural energy resources has become commercially viable. In the Arctic area, new projects are following in the steps of the Yamal LNG Project. Asian countries, including Japan, who import energy resources, will welcome the access to new energy sources, particularly with respect to energy security, and it is expected that there will be a significant trade growth in energy delivered through the Northern Sea Route.

In addition, the company notes that, for trades between Europe and Asia, the Northern Sea Route is a much shorter distance, compared with the traditional route via the Suez Canal, resulting to less time, and therefore reduced costs and CO2 emissions.

The Russian Far East is located at the entrance of the Northern Sea Route, making it an important gateway once the anticipated increase in trade via the Northern Sea Route is realized. This is the key element behind the signing of the MoU between MOL and FEIA.

Currently, FEIA assists the implementation of several mega-projects, including the development of the Northern Sea Route as a commercially viable corridor for Russian and foreign goods. General Director of FEIA Leonid Petukhov said:

We hope that MOL will be effectively using the Northern Sea Route for transporting cargos to Japan and other Asia-Pacific countries and jointly we will be able to attract significant investments into the Northern Sea Route infrastructure development. The Agency is ready to help MOL in implementing all its current and future projects.

Minister for the Development of the Russian Far East, Alexander Galushka, emphasized that this cooperation will help both to strengthen Russian-Japanese economic cooperation and the development of the Northern Sea Route.